Operating a business involves ensuring compliance with various regulations and disclosure requirements within various jurisdictions. These requirements may relate to providing accurate information regarding certain financial aspects of the operations of the business, and are also often bolstered by accounting, taxation, securities, and/or other financial disclosure requirements. One specific requirement of these financial disclosure requirements involves the appropriate timing of revenue recognition, as this may impact business valuations, profit margins, debt levels, and the like.
Recognizing revenue may take on various forms depending on the nature of the underlying financial transaction and/or service/goods provision. Thus, various revenue arrangements may be realized depending on the nature of the various underlying transactions. Revenue arrangement is a functional relationship that deals with how revenue is recognized in various types of business transactions. For example, in some cases, splitting a single sale from a customer into multiple sales depending upon the number or types of items from the original SO that have been fulfilled may provide a way to more efficiently track the processing of the order. In other cases, multiple sales (from a single customer) may need to be merged to correctly recognize/allocate/arrange the revenue generated from a related set of orders or a specific task or project, or to correctly update financial data. In still other cases, if the revenue allocation/arrangement may be “insignificantly different”, then the system may be configured to automate the revenue arrangement a certain way, without requiring a manual approval process (where “insignificantly different” may be defined as a % value of the revenue.
Revenue recognition regulations/standards define/outline what portions/aspects of revenue can be recognized and under what conditions. The timing of revenue recognition is nontrivial, in that a “deliverable” or performance obligation for an order can be an item fulfillment, completion of a milestone, support, or anything else related to a service that will be provided to a customer (and either directly or indirectly). Applications and data stored on a multi-tenant business data processing platform (and the way in which they are structured and interact) offer an opportunity to tie a trackable event to a revenue element, and as a result, to trigger commencement of amortization or another revenue recognition operation. Such tracking, however, is labor-intensive, cumbersome, and prone to human error.
Note that the same numbers are used throughout the disclosure and figures to reference like components and features.